China’s Hainan sees duty-free sales boom as shoppers look for ‘convenient’ alternative to Hong Kong
- The number of duty-free shoppers visiting the island increased by 73 per cent year on year in 2021, while sales grew by 83 per cent
- Analyst says there is a correlation between Hainan’s booming duty-free sector and Hong Kong’s strict coronavirus border controls
Duty-free sales in China’s island province of Hainan surged to 50.49 billion yuan (US$7.9 billion) in 2021, growing 83 per cent from a year earlier, as the coronavirus pandemic continues to limit travel abroad and Hong Kong’s stringent quarantine controls make it difficult for mainlanders to visit the city.
Hainan’s commerce department said the number of duty-free shoppers to the island increased by 73 per cent year on year, and the volume of duty-free purchases rose by 71 per cent over the same period.
The island’s 10 duty-free stores – which also sell non-duty free items – booked sales of 60.173 billion yuan last year, up 84 per cent from 2020.
Will China’s Hainan duty-free mecca boost spending at home?
Starting in 2025, the entire island will be designated duty free, eliminating the need for brands to work with duty-free licensees.
Tourists are already flocking to shopping destinations like the 5 billion yuan Haitang Bay Duty Free Shopping Complex in Sanya city, which is the biggest duty-free complex in the world. It is the fifth-largest luxury shopping complex in the country, according to the China Luxury Forecast 2021, which is published by the Ruder Finn and Consumer Search Group.
02:47
As Hongkongers struggle with rising inflation, the city’s most vulnerable are the hardest hit
About 78 per cent of Hainan’s offshore investment comes from Hong Kong, according to the Hainan Provincial Bureau of International Economic Development.
Figures released by the Hong Kong Tourism Board show that 2.764 million mainlanders visited Hong Kong in 2020, a 93.8 per cent decline from a year earlier, with the luxury and cosmetic industries suffering severely as a result.
It’s a convenient option for [mainland] tourists because they don’t need a visa or to quarantine to purchase cheap goods
Ding Shuang, chief economist for Greater China at Standard Chartered Bank, said there is a correlation between Hainan’s duty-free growth and Hong Kong’s border controls.
“It’s a convenient option for [mainland] tourists because they don’t need a visa or to quarantine to purchase cheap goods,” he said.
Still, Ding said it was not realistic to think Hainan would replace Hong Kong as China’s pre-eminent shopping mecca, because each was unique.
“Shopping is not the only purpose for mainland tourists’ arrival to Hong Kong. Financial services, medical and tourism are also sources of attraction,” he added.
A survey of 550 duty-free shoppers in Hainan conducted by consultancy McKinsey in June 2021 found more than 60 per cent would return to shop, even after international travel resumed.
